How can I Increase CIBIL Score from 600 to 750 points?

The arithmetic behind CIBIL score is in the consumer interest to understand. After all, your CIBIL Score defines your credit worth. As a rule of thumb, a Credit Score above 750 points makes you, and anything below this mark makes you less attractive prospect for lending. A lender may reject your application or ask for a higher rate of interest.

A good credit rating can help you grow financial wings to your dreams. A low Credit Score, say anywhere between 600-650 points reflect low confidence of the lender in your repayment capacity. A low score could also be a result of red marks in the Credit Information Report of the applicant. Thus, you should carefully set your terms before accepting the lender’s offer. Currently, there are four credit rating agencies in India, namely TransUnion CIBIL, Experian, CRIF High Mark and Equifax. 

Some of the common reasons for low Credit Score are:

• Default/delinquency
• High credit utilization ratio
• Excessive dependence on Credit Cards
• Balance on Credit Cards
• Recent loan queries/loan rejections
• A high debt to income ratio
• Fraud or error in the report

In all these cases, it will become difficult to get approved for a loan. In many of these cases, a loan comparison site may help you locate an NBFC or financial institution willing to extend a loan for bad score applicant. However, it is important to understand here that a bad credit loan will come with stricter terms and conditions and the higher rate of interest.

It is thus suggested to work on your profile and improve your cibil score at least by 100 points and avail a better loan deal. Yes! Working on your Credit Score is possible. All you require is an ardent will power to mend your report and become credit healthy.

How to improve CIBIL score from 600 points to 750 points?

Some of the actionable steps to improve your scores are discussed below:

1. Clear Credit Card balance:

A lot of consumers roll over their Credit Card balance and pay minimal due to protect the Credit Card late penalty. However what they fail to realise is having a balance in the card adversely affects their credit rating. As a first step to improve your Credit Score, you must ensure that there is no outstanding balance on your Credit Card.

Read Also: CIBIL Dispute

2. Manage credit utilisation:

Your Credit Card could be one of the best allies to help you improve your score. Your monthly card spends reflect the summary of your credit habits. So if you want to improve your score shortly, you must manage your credit utilisation.

If you own limited cards and exhausting the limit every month, it is time to expand your credit limit. By applying for a new card, you can raise your credit limit and reduce the credit utilisation ratio. High credit utilisation ratio reflects that you are short of cash and looked at as a risky prospect.

In complete contrast, if you are using too many cards, you must close idle cards and limit your credit usage. It is advisable to close the card with bad history. Never close the oldest card with a good track record of bill payments.

Read Also: CIBIL Score Range

3. Build a good credit history:

With red flags in the report, there is a limited choice left to improve the score. While you cannot remove the bad history from your Credit Information Report, you can surely build a good history and fade off the bad past behind. 
Although it will take too many years to push out bad history entirely out from your report, by repaying your loans on time, you will establish a good credit history, and that will help you become eligible for a loan soon. Your recent credit repayment history is one of the solid proofs of your ability to borrow and pay back.

Read Also: Check CIBIL Score By PAN Card

4. Consolidate loans and reduce monthly EMI burden:

In case you are struggling with too many loans and Credit Cards, consider consolidating these debts and opt for a smaller EMI. Apart from clearing card balance, you must also close some accounts. Repaying Credit Card balance and closing some loans will boost your score.

5. Dispute errors in the report

A lot of times, a low score is a result of an error or dispute in the report. You must assess your report and dispute any errors at the earliest. In case, there is any unidentified transaction, notify the authorities. Do not take unknown hard queries lightly as this could be an intrusion by a hacker. You must take a needful step such as blocking the card, without delay.

6. Do not settle the loan

As a consumer, you may consider to opt for settling the loan and ease off the repayment burden. However, this settled account is highlighted in the report as well. This is why you must always refinance and close the account rather than settling it down.

7. Improve the mix of credit

If your Credit Score is low because of too many Unsecured Loans and Credit Cards, you should try to balance the portfolio by applying for a secured card, or a secured loan. A secured loan is better for a profile.

As you can see credit improvement is all about managing your financial habits. While none of these steps can assure you instant results, following a couple of these points, your score will gradually improve within six months.

Besides, use following tips to get a hassle-free loan:

Assess your eligibility before applying for a loan.

Do not make too many hard queries. Seek professional help and compare various deals first.

Borrow according to your repayment capacity. Use EMI Calculator to fully understand the burden of a loan.

Build a backup plan for repayment besides improving your score.

Seek a guarantor or co-applicant for a cheaper deal.

You can also opt for a secured loan for a better rate of interest.